CORRECTED - UPDATE 2-Software AG confirms 2009 outlook, shares up

Tue Jan 27, 2009 5:50am EST

(Corrects fourth paragraph to show operating profit was 54.9 million euros, not 564.9 million)

* Fourth quarter sales up 14 pct at 212.4 mln euros

* EBIT up 28.3 pct at 54.9 mln euros

* Confirms 2009 outlook, 2011 sales targets

* Sees acquisitions opportunities

* Shares gain 9.2 percent (Adds CEO comments, analyst comment, share price)

By Nicola Leske and Peggy Kropmanns

FRANKFURT, Jan 27 (Reuters) - Germany's Software AG (SOWG.DE) confirmed its 2009 outlook on Tuesday after strong fourth-quarter results and said it was well-positioned to make acquisitions, sending its shares more than 10 percent higher.

"We have hardly felt an impact from the financial crisis," Chief Executive Karl-Heinz Streibich said.

He said there was a demand for Software AG's products that help businesses become more efficient.

Software AG said for its fourth quarter it posted a 14 percent rise in group revenue to 212.4 million euros and an operating profit of 54.9 million euros, up 28.3 percent -- thanks mainly to the integration of webMethods.

Analysts polled by Reuters on average had expected fourth-quarter sales to increase by 7 percent to 200 million euros and operating profit to grow 14 percent to 49 million euros.

Software AG's shares were up 9.2 percent at 43.00 euros at 0827 GMT after rising more than 10 percent in early trade as analysts cheered key figures that beat expectations and the company confirmed its outlook.

Software AG, a distant second to SAP SPAG.DE among German software makers and the fourth-largest maker in Europe, has two main revenue streams -- one from helping companies to modernise and manage applications for large mainframe computers, and the other from helping to design and deploy Web services and get the most out of older IT investments.

Streibich told Reuters in an interview that while he could not comment on the first quarter of 2009 he was sticking with the company's 2009 targets of 4 percent to 8 percent revenue growth and an operating margin of 24.5 percent to 25.5 percent.

"That we are confirming our targets should tell you something about the first quarter," the CEO said.

Streibich also confirmed that Software AG remained committed to reaching its 1 billion euro ($1.31 billion) revenue goal by 2011 through both organic growth and acquisitions.

"Acquisitions should be somewhat easier than organic growth because acquisitions are cheap right now," Streibich said.

"We have a high cash flow and are very creditworthy," he said, adding that the company had its sights set on some potential targets but declined to elaborate.

He said that Software AG could manage another purchase the size of webMethods should an opportunity arise.

In 2007, Software AG bought U.S.-based software company webMethods for $546 million, the biggest acquisition in the company's history.

However, Streibich said acquisitions of that magnitude were not the norm and currently none were planned.

Streibich said he expected webMethods to remain one of Software AG's main growth drivers, aiming at 4 percent to 10 percent sales growth for the unit.

For its ETS mainframe unit, which helps companies maintain and update large mainframe computers, Software aims to achieve 4 percent to 6 percent revenue growth, Streibich said.

DZ Bank analyst Oliver Finger said in a note that the numbers were "surprisingly good", given the current market environment.

"We are in particular positively surprised by the performance of the Webmethods division, which clearly outperformed the expectations," he said.

Software AG trades at 9.35 times estimated 2009 earnings compared with a sector average of 11 according to Reuters estimates. U.S. rivals Tibco TIBX.O and IBM (IBM.N) are valued at 11 times and 9 times, respectively.

SAP, which issued a profit warning in October, is due to report fourth-quarter and full-year earnings on Wednesday. (Editing by Karen Foster)